Wednesday, March 11, 2009

New Essay from Martin Armstrong

12 comments:

Anonymous
said...

Hi FOFOA,

Here's an important link. You had posted about someone who had lived through the collapse in Argentina. The following link has organized scenes from that collapse. I sure hope it doesn't happen in the USA...but there's a good chance it can.

Thank you Anon for the link. Here is a hyperlink. And here is the description:

Documentary on the events that led to the economic collapse of Argentina in 2001 which wiped out the middle class and raised the level of poverty to 57.5%. Central to the collapse was the implementation of neo-liberal policies which enabled the swindle of billions of dollars by foreign banks and corporations. Many of Argentina's assets and resources were shamefully plundered. Its financial system was even used for money laundering by Citibank, Credit Suisse, and JP Morgan. The net result was massive wealth transfers and the impoverishment of society which culminated in many deaths due to oppression and malnutrition. Official name: Memoria del Saqueo by Fernando Solanas 2003.

For those who don`t know me, I am a bank analyst in South America .I trading stocks for almost more than 10 years. I followed the US markets for years too.I have lived my first hyperinflation times in full conciousness at the age of 9.I remembered those times in a very clear way.Times like 50% inflation per MONTH OR MORE. yES. Prices just double in matter of weeks. I remembered the people talking about the DOLLAR ( save haven) every day every week. The key was to collect your month pay, and run to buy all the food and stuff.I remember that While we were shopping , a food store employee was changing prices with some kind of machine, can by can, product by product.The key was to grab your food to the cashier before it got the new "price tag". ( not all the food store owned those codbars systems like now).

Life made me live in full consciouness the Argentinian collapse in 2001.Just like the Iceland collapse of now.

If it’s ‘as simple as that’ the leap might be made that the reason for the Washington Agreement to sell gold would be to make the Euro look weak. In other words, the currency is so weak they have to use the reserves to prop it up. Meanwhile, as they make that currency look bad, the gold reserves have the effect of making the dollar look better – it’s tied to the exchange of gold.

Thus, will CBs buy and sell gold in a turbulent market? It would seem that the ones that want to appear weak will.

It’s just a thought.

November 13, 2008 11:25 AM

Anonymous said...

The CB gold-actions of this past decade are a goldreserve redistribution between CBs who want to adopt the concept of freegold-wealth-reserve.

100 Chickens need less freegoldreserve than 1000 chickens.

This redistribution is almost complete as the euro gained sufficient global dept versus the dollar.

New York (Platts)--10Mar2009Central banks, which have been net sellers of gold in recent years, were net buyers of an estimated 1.1 million oz in January, according to the latest Market Alert by the CPM Group, the New York-based metals consultancy. The world's central banks were both buyers and sellers, but the quantity bought outstripped what was sold.

Ecuador is estimated to have purchased 920,000 oz of gold in January, Venezuela bought 240,000 oz and Russia purchased 130,000 oz, after having bought 310,000 oz in December.

"Ecuador's government has run into severe political and economic problems, and has a dollarized economy, using the US dollar as its currency and thus not having many monetary tools, such as being able to issue money that other central banks possess," CPM noted.

France was the largest seller of gold in January by 40,000 oz and 10,000 oz, respectively.

"It seems highly unlikely that such large net purchases of gold by central banks will continue," said CPM. "However, those central banks that have been selling gold for much of the past two decades have sold most of what they wanted to sell. Others are buying small volumes, and considering larger purchases, in the face of the financial crises and currency market volatility they have faced over the past year."

The article is about Robert Mundell. Something tells me there is more to this story than meets the eye. But being on Drudge today has exposed it to millions of eyes so far. 24 million visits to Drudge in the past 24 hours according to his counter.

Here is Mundell in 1997, around the same time Another started posting his warnings:

But I do not think that we will see the time when either of those two great economic powers, the United States and the European Union, will ever again fix their respective currencies to gold as they have in the past. More likely, gold will be used at some point, maybe in 10 or 15 years when it has been banalized among central bankers, and they are not so timid to speak about its use as an asset that can circulate between central banks. Not necessarily at a fixed price, but a market price.

The more countries start to think about gold as an index, as a warning signal of inflation, the more the monetary authority will try to keep the price of gold from rising. Imagine that tomorrow the price of gold rises form $350 to $400. Don't you think that immediately the Fed will see that as a signal of an increase in inflationary expectations and the need to tighten? Europe has already done that. There are long periods when it appears that Europeans have been stabilizing gold whenever the dollar has been depreciating against gold. This will be a major factor in moderating the exchange rate fluctuations between these two great blocks. This is vital to Europe, because nothing could make Europe more uncomfortable than to have big fluctuations in the Dollar-Euro exchange rate. Looking at gold would be one way to circumscribe these fluctuations.

Robert Alexander Mundell C.C. (born October 24, 1932) is a professor of economics at Columbia University.

Notable awards -- Nobel Prize in Economics (1999)

Among his major contributions are:

Theoretical work on optimum currency areas. Contributions to the development of the euro Helped start the movement known as supply-side economics. Historical research on the operation of the gold standard in different eras. Predicted the inflation of the 1970s.

His analysis led to his conclusion that it was a disagreement between Europe and the United States over the rate of inflation, partially to finance the Vietnam War, and that Bretton Woods disintegrated because of the undervaluing of gold and the consequent monetary discipline breakdown. There is a famous point/counter-point over this issue between Mundell and Milton Friedman.

This work would later lead to the creation of the euro, and his prediction that leaving the Bretton Woods system would lead to "stagflation" so long as highly progressive income tax rates applied. In 1974 he advocated a drastic tax reduction and a flattening of income tax rates.

Mundell, though lionized by some conservatives, has many of his harshest critics from the right: he denies the need for a fixed gold based currency or currency board though he often recommends this as a policy in hyper-inflationary environments - and he is both a fiscal and balance of payments deficit hawk. He is well known for stating that in a floating exchange rate system, expansion of the money supply can only come about through a positive balance of payments.

Robert Mundell has appeared on CBS's Late Show with David Letterman. His first appearance was in October 2002 where he gave The Top 10 List on "Ways My Life has Changed Since Winning the Nobel Prize." In March of 2004 he told "You might be a redneck" jokes followed in May of 2004 with "Yo Mama" jokes. In September of 2004 he appeared again, this time to read excerpts from Paris Hilton's memoir at random moments throughout the show. In November of 2005 he told a series of Rodney Dangerfield's jokes. On February 7, 2006 he read Grammy Award nominated song lyrics, the night before CBS aired the 48th Grammy Awards.

Robert Mundell has also appeared on China Central Television's popular Lecture Room series.

The Evolution of the International Monetary System and Its Relationship with China 9/6/2006 Beijing, China

Robert Mundell gave a report entitled "The Evolution of the International Monetary System and Its Relationship with China" at the Capital University of Economics and Business in Beijing.

I was also amazed on this small message begin of feb (lucky it was posted in whole on feb 11th 09:38 http://new.cash.be/forum/berichten.do?pagenumber=1555

Feb. 11 (Bloomberg) -- Nobel economics laureate Robert Mundell said the U.S. Federal Reserve should have stopped an appreciation of the dollar in the second half of last year to avoid a deepening global financial crisis.

The U.S. and Europe should peg their currencies to a range of between $1.20 and $1.40, and use that as a basis for establishing "a new world currency," Mundell said in a speech at the Hong Kong Monetary Authority. He also said that Asia should look into creating a regional currency.

As from that date on it seems the PEG $<>€ was/is a fact. Than keeping in mind the chinese are preparing a regional test with a kind of gold backed currency the dots could be easy connected to Mundell.....

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